What is Inmet Mining Corp.’s hostile offer for Petaquilla Minerals Ltd. really about? While the two sides have offered up vastly different interpretations, they both agree the $112-million bid has almost nothing to do with Petaquilla’s flagship mine.

Petaquilla operates Molejon, a small gold mine in Panama, while Inmet is developing a giant US$6-billion copper project next door called Cobre Panama.

Toronto-based Inmet is not a gold miner and has no interest in becoming one. So when it bid for Petaquilla in early September, Inmet said it was simply trying to eliminate a potential “source of disruption” from its neighbouring project. More specifically, Inmet talked about improving environmental oversight at Molejon.

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Analysts speculated that Inmet was concerned about potential environmental issues at Molejon that could taint Cobre Panama. But on Monday, Petaquilla dismissed that as nonsense as it formally rejected the bid. Instead, it claimed the bid is all about Petaquilla land rights that Inmet craves for Cobre Panama.

“We’ve got land rights over large surfaces that Inmet absolutely requires to carry out the copper project,” Petaquilla chief executive João Manuel said in an interview. “We’re talking about 3,000 hectares, or something like 5,600 American football fields.”

He said the two companies met several times about the land concessions, and notes Inmet would likely have to downsize its project if it does not get access to them. He expressed confidence the two sides can still come to a friendly agreement.

Mr. Manuel also dismissed Inmet’s comments about Molejon’s environmental record as a “smokescreen. We’ve got a great track record of environmental performance,” he said. “We are in complete compliance with all the standards.”

He will now have to convince Petaquilla’s shareholders that Inmet’s proposal is too low and that his company has better options.

Inmet’s cash-and-stock offer of 48¢ a share was below where Petaquilla shares traded in early 2012, but it was still a 37% premium over the closing price the day before the bid.

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